When Tony Blair said last week that euro membership was Britain's "destiny", he was keeping open the possibility of a euro referendum next year. If the five economic tests are met, the political advantages of having a "no" campaign led by the Tories at their most unpopular could hardly be more tempting.

The "no" campaign is also further impeded by a five-year track record of scare stories that have come to nothing. These are likely to undermine any future attempts to frighten the British public away from agreeing to join the euro.

Take, for example, the current scare that euro membership would poleaxe public services. In order to join, the sceptics say we would have to yield up all the better healthcare and education promised in the Government's spending plans.

This is absurd. Eleven of the 12 euro-area countries spend more on public services than we do. Europe is the home of the high-quality welfare state. Only Ireland spends less, at 30% of national income compared with our 38%. The biggest spender last year was Austria with 49.6%, the sort of munificence that Unison and the other anti-euro unions can only dream about.

And there is nothing to impede Britain moving to a higher level of spending, so long as it is sustainably financed. The stability and growth pact limits borrowing, but has no limits on taxation or spending.

It is also becoming more flexible on borrowing. In its latest review of UK budget proposals, the commission highlighted both our low public debt and the build-up in public investment as acceptable reasons for a temporary rise in borrowing. After all, public investment as a share of GDP has been lower in this country than in any other EU nation, under both Labour and the Tories.

Indeed, the chances of achieving the planned build-up in public spending are higher within the euro-area than outside it. The repeated culprit in previous Labour u-turns in 1949, 1967 and 1975 has been our old enemy, the sterling crisis. Within the euro-area we would be protected from speculative capital flows.

These scare stories about the euro are now part of a depressing pattern that Nick Canning and I describe in a new pamphlet published yesterday.

The "no" campaign has repeatedly made scurrilous prophecies about the single currency on the apparent principle that some sucker will believe them.

For example, the "no" campaign and the Conservative leadership claimed at the last general election that the costs of converting pounds into euros would amount to £35bn in Britain - or 4% of national income.

This was supposed to be a prohibitive cost of entry for small businesses.

The facts are now in. The arrangements for conversion varied from country to country, with some spending more on advertising and prolonged price comparisons to avoid rounding-up. But not a single member state managed to spend more than 0.8% of national income on conversion costs, with most at around 0.5%. Even with our national genius for panic - remember our extravagance with the millennium bug - not even we could spend five times as much as the biggest spender in the existing euro-area.

In reality, UK conversion costs will be no more than £7.5bn and will pay for themselves in the saved commission on foreign exchange trading within two years. That is the sort of investment payback that most businesses only dream about.

Then there was the repeated claim by the "no" campaign that having a single interest rate and exchange rate for such a large area - the so-called "one size fits all" issue - would lead to disastrous consequences for Ireland. The leading "no" economist and member of the council of Business for Sterling, Professor Patrick Minford, was typical of the clamour.

Prof Minford predicted in the summer of 2000 in an article in the Daily Telegraph that Ireland's inflation, then at 7%, would rise to 10% for two or three years at which point Ireland would have to leave the euro. Ireland was supposed to become so over-heated that it would head for meltdown.

Instead, Irish inflation has gently subsided and now stands at 4.5%. The Irish prime minister, Bertie Ahern, has just led his party to its strongest success for three decades, and the recent eurobarometer poll found that the Irish are the most satisfied members of the euro-area.

But the "no" campaign's scare story should not have come as a surprise, since they had also been wrong on the launch of the single currency. Of course, a bevy of politicians such as Michael Howard, Norman Lamont and John Major predicted that the euro would never happen. But the "no" campaign's more serious thinkers did too.

Prof Tim Congdon, a leading Business for Sterling member, said: "It is a fantasy and it is just not going to happen. Neither the EU nor a subset of its members will have a single currency on January 1 1999, January 1 2002, January 1 2003 or indeed at any date in the relevant future." That quote is from 1996, but Professor Congdon repeated this fervent prophecy until weeks before the launch in 1999.

Britain need fear nothing from euro membership. The real dangers lie in staying outside the euro-area and facing the risk that sustained and stable growth of the economy and of public services could once again be derailed by foreign exchange crises.

Crystal Balls: false prophecies from anti-Europeans, by Chris Huhne MEP and Nick Canning, is published by Britain in Europe.